Avid Bioservices Inc (CDMO)

[Fire Fox]

Good point Chalu. I agree that the Company should negotiate a minimum period of 2-3 years during which the preferred stock could not be converted to common.

This would give the Company some breathing room to prove out the anti-PS platform. Once PPHM has proved itself to be part of the mainstream of immunotherapy and has a strong partner, the investment banker holding the preferred shares would much rather bet on getting his principal back (or maybe even doubled via sale to a strategic BP) through an upside play than a downside shorting game.

But I agree that common stock dilution is common stock dilution no matter how you cut it. If the Company is not doing well 2-3 years from now when the preferred stock becomes convertible, the shorts might see the conversion and follow-on dump in the public market as an easy way to cover their short.

If the stock price 2-3 years from now is doing well and looking to get even stronger, the investment banker will dribble the shares out slowly into the rising market and the shorts will be hung out to dry.